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Need money to renovate a kitchen, buy a new car, pay bills while you’re unexpectedly out of work or facing an illness? Want to consolidate your other debt, for ease of repayment and to reduce your monthly payments? Need more funds and at a lower interest rate than you can obtain with a credit card? You might want to consider a personal loan.
Compare personal loan products from dozens of providers in a matter of minutes, without impacting your credit score, and get the money you need, at the most competitive rate on the market.
Personal loans are lump sums issued to an individual and then paid back, usually in monthly instalments, with interest, over a designated period of time.
Personal loans are usually not secured against any asset, so they’re also sometimes referred to as personal loans. That means you can borrow money without putting your possessions or home on the line.
To find the loan that best suits your needs and financial circumstances, it pays to compare as many offers as possible. However, seeking quotes from individual lenders is not only time-consuming, it can also impact your credit score, if these lenders are running hard credit checks on you.
Hard checks, also known as application checks, leave a mark on your credit file for other lenders to see. And multiple credit searches run over a short period of time can raise red flags for lenders, as they can make it seem you’re desperately searching for credit.
Use our comparison engine, powered by Monevo, to conduct a soft eligibility check, allowing you to see a list of pre-approved loan options, without affecting your credit score.
You’ll need to provide information for them to run a credit search on you, but they’ll do a soft or quotation check, which won’t be visible on your credit report. Searching for a loan in this way therefore won’t impact your credit score and your eligibility for personal loans with the best interest rates.
To conduct a search, you’ll need to supply some personal information and then you’ll be given a list of personalised, pre-approved loans to choose from, subject to lender criteria. Our comparison engine is free to use and you’re under no obligation to proceed after obtaining loan offers.
Personal loans are commonly used for home improvement, for vehicles purchases, for further education or training, or to consolidate existing debt. They’re a way of spreading the cost of a large purchase over a number of months or years or making ends meet in emergency situations. Technically, you can use a personal loan for almost anything, from paying off medical bills to booking holidays to paying bills if your income is reduced due to unforeseen circumstances. You will be asked what you intend to do with the funds as part of the loan search and application process.
With a personal loan you can borrow a larger sum than you could place on a credit card—as much as £25,000, depending on your personal circumstances, income, and credit history. You can borrow as little as £500 or £1,000, sometimes by using a type of personal loan called a short-term loan.
Longer term personal loans typically have lower interest rates than you can obtain with credit cards and those interest rates are usually fixed. But be aware that some personal loans will come with variable interest rates. Please also note short-term personal loans will often have much higher interest rates. Always read the fine print of any loan before you commit to it.
Most unsecured personal loans last one to five years. However, in some circumstances you might be able to borrow money for longer. Short-term loans allow you to borrow money for as little as 30 days.
As part of the search for a personalised loan product, you’ll typically need to provide the following information:
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Personal loans are typically unsecured, meaning you don’t use an asset such as your home or vehicle as collateral. An unsecured loan means you won’t risk losing your valuables if you default.
Loans which use your car as collateral. You can borrow between £500 and £50,000, although some lenders will only lend up to half of the car’s value. In taking out these loans you’re technically handing over ownership of the vehicle until the loan is paid off, but will continue to have use of it. You’ll generally be required to surrender the vehicle’s logbook or vehicle registration document to the lender.
Some lenders do offer secured personal loans, those which use an asset, such as a vehicle or home, as collateral. Specific types of secured personal loans include logbook loans, which are secured against your vehicle. If you have poor credit, you might be able to obtain a loan or borrow more with a secured loan, but make sure you can make the repayments or you risk forfeiting your property or possessions.
However, some lenders will offer personal loans with variable interest rates, which are pegged to the wider market and will fluctuate over the course of the loan. You may be able to find a lower initial interest rate with a variable rate low but be aware that it may rise. You need to be prepared for your repayments to rise. These loans are often delivered with a line of credit, which means you can borrow exactly as much as you need and add more to your debt as your needs change.
A guarantor loan is an unsecured loan in which the borrower nominates a person to make payments if they fail to do so. A guarantor can increase your chances of being approved for a loan if you have bad credit.
If you’ve accumulated a lot of debt across various credit cards, store cards, and loans, you may want to take out a debt consolidate personal loan. These loans can give you the funds to pay off your existing debt. You then payoff that loan, with a single and hopefully more manageable monthly payment. Consistent repayment of this loan can streamline your finances and help you improve your credit score but be aware you won’t necessarily save money.**
While most personal loans last between one and five years you can obtain short term loans for much shorter terms. These are loans to be paid off within a short time frame, usually 30 days up to a year. Please note, high cost short term credit is unsuitable for longer-term borrowing.
They were formerly known as payday loans and can come with high, and even exorbitant interest rates. However, they may be useful for people who just need a little extra money to help them cope with an emergency or unforeseen situation, like a broken down car or boiler. Make sure you pay off these loans promptly, on their due dates. Missed payments could result in the total cost of the debt growing, default charges, impaired credit rating and legal proceedings.
Still got questions about unsecured loans? You'll find answers to some common queries below:
You can usually borrow up to £25,000 - and occasionally up to £50,000 - with a personal loan. And while you might be able to find a personal loan for as little as £500, most lenders won’t lend less than £1,000. However, the amount you personally will be approved to borrow will depend on your personal circumstances, including your credit score and net monthly income.
With most personal loans you have a cooling off period of 14 days, dating either from the day the loan agreement was signed or when you receive a copy of the agreement, whichever is later. During this time period you can cancel the loan without penalty, only paying for the interest in the period you had the credit, provided you return the money within 30 days. Any additional loan fees will have to be refunded.
In addition to the interest on the loan, you’ll also be charged other fees for borrowing. These should be included in the quoted APR (annual percentage rate), which represents the total cost of borrowing the money for a year as a percentage. These fees may include arrangement fees.
The APR you’re quoted will be a representative rate. Just over half (51%) of people who apply for the loan will receive this rate or better. The rest will pay a higher interest rate. You’ll likely pay higher than the representative APR if you have a poor credit score.
If you forget or can’t afford to make a monthly payment on your personal loan, you’ll be charged a penalty fee. In addition, you’ll end up paying more in interest overall because you’ll be borrowing the sum for a longer period of time.
This depends on the lender who you choose to borrow from. Some lenders will allow overpayments and early settlement, and some will charge you an early repayment or early redemption fee. Always ensure you check if there are any costs associated with making overpayments or settling your loan early before you fully commit to any loan.
*If a lender has pre-approved for a loan product this means they have conducted a soft search of your credit file and there is a good chance they will lend to you. Pre-approval does not guarantee you a loan. All loans are subject to lender and provider requirements and approval.
** Consolidating existing debts may involve repaying a higher rate of interest or charges, or increase the duration of repayment.
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Last reviewed: 19 November 2020
Next review: 19 December 2020